1.6. Two competing firms are each planning to introduce a new product. Each will decide whether to produce Product A, Product B, or Product C.

They will make their choices at the same time. The resulting payoffs are shown below.

a. Are there any Nash equilibria in pure strategies? If so, what are they?

b. If both firms use maximin strategies, what outcome will result?

c. If Firm 1 uses a maximin strategy and Firm 2 knows this, what will Firm 2 do?

Transcribed Image Text:

Firm 2 A B C A -10,-10 0,10 10, 20 Firm 1 B 10,0 -20,-20 -5,15 C 20, 10 15,-5 -30,-30